13 July 2018

Tanzania: Central Bank Adopts Plan to Control Inflation

Dar es Salaam — The Bank of Tanzania (BoT) is finally looking to implement the Price-Based Monetary Policy (PBMP) during the 2018/19 financial year.

The BoT senior economist in the Economic Research and Policy Department, Mr Lusajo Mwankemwa, said disclosed this yesterday at the Dar es Salaam International Trade Fair (DITF). Speaking to The Citizen, Mr Mwankemwa said the PBMP will now be used to control inflation.

"We are in the process of shifting to the new plan. We are currently using the Quantitative Price-Based Policy, but things will soon change," he said. However, he noted that with technological changes, particularly in mobile money transactions, the Quantitative Money-Based Monetary Policy has become weak and is failing to control inflation.

Mr Mwankemwa stressed that they were working hard to control inflation, but the ever changing technology in the financial sector is making it difficult for them to attain their goal.

Globally, according to him, the PBMP is being implemented in countries such as New Zealand, US, UK and several other developed nations.

"Most of the developed countries use this system because the level of financial innovation is high compared to developing countries," he said. He added that in Africa some countries have already adopted it, including South Africa, Kenya and Uganda, and that regionally the East African Community (EAC) has agreed to implement the policy.

Currently, BoT determines the quantity of money in supply through the Quantitative Based Monetary Policy, however interest rates change in accordance with the quantity of money on supply thereby affecting the market price.

He said the central bank will now be setting interest rates in which it will be lending to commercial banks and not individuals.

According to him, the BoT's expectation is that lower interest rates to commercial banks will have a trick-down effect.


Why CCTV Is Key to Resolving Mo Dewji Kidnap Mystery

The key to resolving the mystery surrounding the kidnapping of billionaire Mohammed Dewji lies in establishing who… Read more »

See What Everyone is Watching

Copyright © 2018 The Citizen. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 600 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.